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CITY OF PLEASANTON
<br />
<br />NOTES TO BASIC FINANCIAL STATEMENTS
<br />FOR THE YEAR ENDED JUNE 30, 2022
<br />
<br />
<br />Note 2: Cash and Investments (Continued)
<br />
<br />GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments
<br />and for External Investment Pools, requires that the City’s investments be carried at fair
<br />value instead of cost. Accordingly, the City adjusts the carrying value of its investments
<br />to reflect their fair value at each fiscal year-end and the effects of these adjustments are
<br />included in income for that fiscal year. Changes in fair value at the fiscal year ended
<br />June 30, 2022, from the fiscal year ended June 30, 2021, amounted to an unrealized
<br />loss of $18,529,606.
<br />
<br />c. Interest Rate Risk
<br />
<br />As a means of limiting its exposure to fair value losses arising from interest rates, the
<br />City's investment policy limits investments to a maximum maturity of five years. At
<br />June 30, 2022, the City had the following investment maturities:
<br />
<br />Less than a year 1 - 5 Years Total
<br />US Government Agencies
<br />Non-callable 1,994,260$ 2,775,570$ 4,769,830$
<br />Callable - 146,967,665 146,967,665
<br />Medium-Term Corporate Notes 9,667,071 29,726,287 39,393,358
<br />Non-Negotiable Certificates of Deposit 257,958 261,207 519,165
<br />Supranationals - 913,490 913,490
<br />California Local Agency Investment Fund 34,549,389 - 34,549,389
<br />PARS Section 115 Pension Trust Fund - Mutual Funds 43,293,783 - 43,293,783
<br />Total 89,762,461$ 180,644,219$ 270,406,680$
<br />Investment Maturities
<br />Investment Type
<br />
<br />
<br />During the year, the City held callable notes. Callable notes are debt securities
<br />(other than asset-backed securities) whose cash flow characteristics (coupon rate,
<br />redemption amount, or stated maturity) depend upon one or more indices and/or that have
<br />embedded forwards or options. They are issued by corporations and by
<br />government-sponsored enterprises such as the Federal National Mortgage Association
<br />(FNMA) and the Federal Home Loan Bank (FHLB). These securities could be called prior
<br />to maturity, depending on changes in interest rates. As of June 30, 2022, the City held
<br />$146,967,665 in callable government agencies, which amounted to 65 percent of total
<br />investments, excluding the PARS Section 115 Pension Trust Fund.
<br />
<br />d. Fair Value Hierarchy
<br />
<br />The City categorizes its fair value measurements within the fair value hierarchy
<br />established by GAAP. The hierarchy is based on the valuation inputs used to measure fair
<br />value of the assets. Level 1 inputs are quoted prices in an active market for identical
<br />assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are
<br />significant unobservable inputs.
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